House prices fluctuate all the time, and this can be alarming if you are relying on a share of the proceeds of sale to purchase another property. Financial settlements depict a snapshot in time, so it is only natural that values will increase or decrease from time to time. But can such a change lead to the settlement being set aside? This article discusses whether, in practice, the settlement be reopened.
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Factors that are beyond your control, such as price fluctuations in the housing market, can introduce uncertainty into financial settlements. What happens if the property market crashes during or soon after your divorce?
Legally, whether a financial settlement can be set aside, appealed or varied largely depends on the nature of the event that has caused the change.
Can a financial order be changed?
There are many hurdles to overcome if an application is going to be successful. The court’s ultimate aim is to achieve financial finality for the divorcing couple, so opening up the case for re-examination is only allowed in very limited circumstances. The event being relied upon must be ‘so significant that it fundamentally undermines the basis on which the settlement was originally reached.’ In legal circles, this is known as a ‘Barder’ event, named for a case in 1987.
To be considered a Barder event, it must:
- Nullify the premise on which the financial order was made, and
- Happen within a short time from the original order
- The person wishing to change the order must apply to the court soon after the event happens; and
- Any changes to the order should not adversely affect another party who may have acquired property included within the order in good faith
In the latter case of Cornick, the court stated that the Barder event must also have been unforeseen and unforeseeable. This makes things such as market crashes irrelevant as a Barder event, because they have regularly happened over the years and are therefore not considered unforeseen or unforeseeable.
It is thought that the financial effects of the pandemic, or future pandemics, will not be considered a Barder event. Largely because experts had long predicted the likelihood of a pandemic, meaning it would fall short of being both unforeseen and unforeseeable. Nevertheless, each case is unique and you should seek legal advice to clarify whether this applies to your situation.
What type of event will the Court consider significant to revisit my divorce settlement?
There are three broad categories into which an order to set aside may succeed:
- Fraud, fraudulent non-disclosure, or misrepresentation of facts material to the case. Fraud is a deception intended to lead to a personal financial gain and most commonly happens where one party lies or fails to disclose something. If you can show the court that there was fraud, etc, then in most cases, the order will be set aside. As stated by Lady Hale in the case of Sharland v Sharland: “fraud unravels all”.
- Negligent or inadvertent non-disclosure of material facts. This concerns a change of circumstances after the order is made, although such cases are rare and fact specific and usually considered a Barder event.
- This refers to a situation where the court is not given the true facts at the time of making the order. The applicant must show that a ‘substantially different’ order would have been made if the true facts had been known. In practice, this ground is used rarely because it must be a mistake made by both parties, for example, where a business had been valued incorrectly.
Do you need family law solicitors for your divorce or property matter?
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Applying to set aside a financial order or appealing it
Do you apply to have the order set aside, or do you appeal it? You may think it amounts to the same thing, however, in law, they are completely different. Generally, if you challenge the order because you think a mistake has been made, then you should really appeal it. If the time limit for making an appeal has expired, then you will first need to get the court’s permission. This is known as ‘applying for leave to appeal out of time’. Usually you have 21 days from the date of the order.
Either party can ask for permission to appeal an order if there has been an error in law or fact. For other types of events, you would generally need to apply to set aside the order by way of a Family Proceedings Rules (FPR) Part 18 Application. This is an extremely complex area of law with complicated procedures, so it is probably sensible to get expert legal advice before moving forward.
As discussed above, not all financial orders can be set aside or varied (altered) for the reasons given. However, ‘income’ orders such as maintenance as opposed to ‘capital’ orders for things like property can be varied. The types of orders which can be varied include:
- Interim maintenance orders
- Periodical payments orders (secured or unsecured)
- Child maintenance/periodical payments orders for a child
- Deferred lump sum order (including provision of pension rights up to the death of either party)
- A pension sharing order
Order which cannot be varied:
- Lump sum orders not payable via instalments
- Property adjustment orders
- Pension sharing orders after the final divorce order has been made
The court has wide discretion when deciding a variation application. If a child is involved, this will always be its first consideration. Following this, the court will look at any changes to the issues the court originally regarded when making the initial order. There is a duty to obtain a clean break where it is possible to do so, and without causing either party ‘undue hardship’, although there is no automatic presumption for the court to favour a clean break.
Whether you are thinking about applying to set the financial order aside, varied, or appealing it, such applications are uncommon and considered high-risk. Caution should always be exercised and legal advice sought before issuing an application.
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